Consumer packaged goods (CPG) retailers and manufacturers are under continuous pressure to improve operational efficiencies, given intense competition, smaller profit margins and ever-increasing operational costs. Manufacturers and retailers work with a fixed amount of retail space and seek to maximize the productivity of that space in order to maximize revenues while controlling costs. Retailers seek to maximize overall revenues through optimal placement of top-performing existing store keeping units (SKUs), proper placement of new SKUs and elimination of less productive SKUs. This usually places a high demand on available shelf space and creates significant competition for shelf space in CPG retail stores. Both retailers and manufacturers commit significant data gathering and analysis to optimizing the productivity of that space.
Currently, CPG manufacturers and retailers use various product tracking techniques, including collecting scanner data from the systems of the retailers, and data consolidated by vendors such as Nielsen® or Information Resources, Inc. (IRI®). There are two limitations to using just scanner data, namely, (1) aggregation and (2) time. In terms of aggregation, scanner data is usually available at store level or at a national chain level (e.g., Kroger®, and Safeway®). In terms of time, data is typically available daily, weekly, or monthly. Because of these two limitations, testing of new products or merchandising arrangements must be done across a large number of stores and over a long period of time (e.g., weeks or months) to accurately detect the effect of the change. These limitations incur significant costs (e.g., typically testing of a new product or new merchandising arrangement requires 20+ stores over 2-3 months for any given “cell” in a test) and limit the number of experimental cells that can be executed. Hence, many valuable experiments that could be conducted are precluded by cost considerations, slowing the overall learning process by retailers and manufacturers and resulting in inefficient use of space.
Therefore, a need exists to address the problems noted above and other problems previously experienced.